TiVo's Future Gives Pause

Remember the chestnut about how it's the second mouse that gets the cheese? It seems to be the case often enough in the tech sector.

From Netscape's browser to Excite's Internet portal to OracleORCL CEO Larry Ellison's "network computer," the first movers in tantalizing new markets are often, in time, relegated to the tiny fonts of history's footnotes.

Is this the fate for TiVo ?

The pioneer of digital video recorders has fought valiantly to stay clear of the footnotes and remain smack in the middle of the big story itself.

One of the rare companies whose name becomes a commonplace verb, TiVo cultivated a small but fiercely loyal fan base while spinning out a string of innovations that kept its edge sharp. It was like a cat with nine lives.

But even cats have only those nine lives. And for TiVo, whose push for new subscribers during last year's holiday season was a big flop, the options as it steers toward profitability are growing scarcer.

TiVo's stock has reflected the growing nervousness, downtrending for the last 10 months with a series of lower highs. Shares closed Thursday down 8 cents to $5.88.

TiVo said that it added 163,000 new subscribers in the fourth quarter of last year, a 26% drop from the 221,000 gross adds a year earlier. Analysts had been expecting a figure north of 200,000.

But 62,000 subscribers disconnected their TiVos in the quarter, a 63% surge from the year-ago figure. Not only did that push up TiVo's churn rate to 1.25% last quarter from 0.9% in the year-ago quarter, it also meant that TiVo added only 101,000 net subscribers, a 45% drop from a year earlier.